The number of investors in Collective Investment Schemes (CIS) has surged to 1.2 million, driving assets under management (AUM) to an all-time high of KES 254 billion as of June 30, 2024.
According to the latest quarterly report from the Capital Markets Authority (CMA), the number of CIS investors has grown by 605% since March 2021, when the investor base stood at just 172,000. This dramatic rise has been fueled by the broadening appeal of investment funds, particularly Money Market Funds (MMFs), which now account for 67.4% of the total AUM.
Money Market Funds Lead the Pack
Money Market Funds continue to dominate the CIS landscape, managing KES 171 billion, a 15% increase from the previous quarter. These funds have become the go-to choice for both individual and institutional investors, thanks to their relatively low risk and higher returns compared to traditional savings accounts. Over the past eight quarters, MMFs have consistently outperformed other types of funds, solidifying their position as the preferred investment vehicle in Kenya.
While Money Market Funds remain dominant, Fixed Income Funds are emerging as a strong contender. Over the past two years, Fixed Income Funds have seen double-digit growth, reducing the dominance of MMFs from over 90% in December 2021 to 67% in June 2024. The report notes that these funds now manage KES 52 billion, representing 20.5% of the total AUM.
Surge in Dollar-Denominated Funds
The report also highlights the growing interest in dollar-denominated funds, which have seen a 260% increase in AUM over the past year, rising from KES 6.6 billion in March 2023 to KES 23.8 billion in June 2024. This surge reflects the growing appetite among Kenyan investors for foreign currency investments, driven by concerns over local currency depreciation and a desire to hedge against inflation.
Investment Distribution: Government Securities Take the Lead
As of June 30, 2024, the report reveals that 39% of the total AUM is invested in Government Securities, making it the largest asset class within CIS portfolios. This is followed by fixed deposits, which account for 33% of the investments. The preference for Government Securities is largely driven by their perceived safety and the attractive returns they offer in a volatile economic environment.
Interestingly, the report also notes a significant shift in investments towards listed securities, which saw a 523% increase in value compared to the previous quarter. This trend indicates a renewed interest in the stock market, as investors seek to capitalize on opportunities in a recovering economy.
CIC and Sanlam Top the Market Share
Among the 51 approved Collective Investment Schemes, CIC Unit Trust Scheme and Sanlam Unit Trust Scheme lead the market in terms of AUM. CIC controls 26.29% of the market with KES 66.8 billion, while Sanlam follows with a 14.81% share at KES 37.6 billion. The success of these schemes is attributed to their wide range of product offerings and strong brand presence in the market.
Future of Fixed Income Funds
The report also points to the rising prominence of Fixed Income Funds as a key trend to watch. These funds, which invest primarily in bonds and other fixed-income securities, have grown substantially over the past few years. As more investors seek stable, long-term returns, Fixed Income Funds are expected to continue gaining ground, potentially challenging the dominance of Money Market Funds in the near future.
